Bob received a proportionate current nonliquidating) distribution of land from the BZ Partnership. The land had a
fair market value of $15,000 and a basis to the partnership of $10,000. The land was held for investment purposes by the partnership. Bob's basis in his partnership interest immediately before the distribution was $6,000. If the partnership has a § 754 election in effect, it will record a $4,000 step-down in the basis of remaining assets, and the step-down will be attributed to all partners in the partnership.

Question

Quizplus · Accepted Answer

The § 754 election allows a partnership to adjust the basis of its assets when there is a distribution of property or a transfer of a partnership interest, but it does not result in a step-down in the basis of remaining assets due to a proportionate nonliquidating distribution. The election primarily affects the basis of the property received by the partner and the outside basis of the partner's interest in the partnership, not a step-down of the remaining partnership assets distributed to all partners.

Bob Received a Proportionate Current Nonliquidating) Distribution of Land from the BZ